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Have conviction and make money?

Saturday, July 21, 2012

It is impossible to see into the future. People who say that they can are like fortune tellers.

How much are their advice worth? How much would we pay fortune tellers to read our palms?

Whatever decisions we make are based on a whole gamut of factors. Then, we have certain expectations of how things would turn out after making such decisions.

The more thoroughly we could reason our feelings of conviction, the higher our chances of staying the course and, dare I say, that our decisions could deliver on our expectations.

Regular readers would probably get the feeling that for whatever has done well for me, I have been reasonably rigorous in my reasoning for those decisions (e.g. to be invested in industrial S-REITs in the last 3 years).

Every person, I believe, has flaws. I have a whole bagful of flaws. One flaw I have when it comes to investment is that I tend to be more careless when I do not have a feeling of crisis.

To have conviction is good but it has to be well reasoned. If I am unable to reason well my conviction, there shouldn't be any conviction.

Remember, however, that conviction is only part of the equation. Luck plays a big part in whether things turn out the way we expect them to.

I was reading The Business Times (weekend edition) and came across an interview with Isaac Souede, the chairman and CEO of Permal, one of the world's largest hedge funds groups.

He is reasonably bullish on China and is exposed to Asian equity through China, "which is seen as pivotal to Asia's fortune."


"If I'm wrong and China has a hard landing, all of Asia won't grow... Most countries in Asia (except India) are in the glide path of a pro-growth policy... which is very positive for equities. But the harbinger of all that is China...

"If Europe stays on a glide path of zero growth for the next five years, US and China will be fine... As long as Europe doesn't become cataclysmic and create a financial issue, then it can be at least cauterised. Europe is a very long term, trial and error solution. The key is for the US and China not to implode."

His conviction is strong and he has his reasons. However, so many things are not within his control. So, a good dose of luck is needed to deliver on his expectations.

Making money needs more than well reasoned convictions but well reasoned convictions should be part of the money making process.

Related posts:
1. Excuse me, are you an investor?
2. How did AK71 overcome his losses?

13 comments:

B said...

I agree. People tend to perform best when they are in a state of conviction or desperation. When people are in their comfortable state, they tend to perform average at best : )

So glad that you didn't retire from blogging :D

B

INVS 2.0 said...

Hi Ak71,

If there is any reason US implodes, it will be none other than their poor spending habit and that fat US ego. They like to waste money on useless things, particularly on military deployments, to score political points back home for the President. But the end result is always detrimental to their economy.

Seems like to Americans, ego issues are more important than economy well-being.

And it's ridiculous to think that they always have tricks in their sleeves to implode China, unknowingly that this will cause the ultimate downfall of everyone including themselves. But they don't care anyway.

AK71 said...

Hi B,

Many people would pursue knowledge to improve their lives. They are pragmatic people.

Of course, there are those who do not care for such pursuits.

Then, there are those who pursue knowledge simply because they enjoy it.

At the end of the day, it is all about being happy, isn't it?

However, there is some knowledge which we should have in order to be truly happy and that is self-knowledge.

I still think of myself as blogging while on a sabbatical from blogging but it is looking less convincing by the day. ;p

AK71 said...

Hi INVS 2.0,

It is quite clear that you have certain convictions as well. haha.. :)

Academically, I am not a political scientist, sociologist or economist. I am half a linguist and half a geographer at best. However, I am going to throw in some ideas:

1. There are prominent political leaders like our respected LKY who think that the USA should continue to have a strong military presence in Asia, for example.

2. Consumerism in USA is part of their culture, it seems. However, it wasn't always the case. It evolved to be so. Is rising consumption a norm on the path of development? Is over-consumption inevitable as countries develop?

These are just ideas in response to your comment. They are not for or against what you have said. Food for thought? ;)

INVS 2.0 said...

Hi Ak71,

A question to these political leaders - in the first place, is China an agressor or defender by nature? :)

Well, every now and then, superpowers come and go. It's a natural cycle that no one can resist.

I see Americans are trying their best to resist it but it's really 江河日下,无力回天. :D

Back to the point on consumerism, I believe US got itself into today's state is because of its over-spending on military deployments. Yes, they are big consumers but they used to have a powerful economy to backup their consumerist culture. When 2008 recession hit US, civilians actually cut back on spendings but not for military. I intially thought that they have woken up by pulling troops out of mid-east to cut cost but no, they deploy even more ppl to Asia. Sounds like a time bomb waiting to blast its fragile economy?

JCK said...

Implosion is relative.

China's used to 10% type of growth...

Whats defined as implosion?

A reduction to 8%, 7% or 6%?

as i understand china's GDP($7T) compared with U.S($15T) and Euroland($17T) is small

So if Euroland goes(i think it will) turtle, watch out there!

AK71 said...

Hi INVS 2.0,

I have to confess that beyond throwing some thought provoking questions, I really have no answers to the issues you have brought up.

I am provoked by my own thought provoking questions but I have no answers... -.-"

AK71 said...

Hi JCK,

Indeed, that is why I agree that as long as the eurozone is able to muddle along with zero growth, we would be safe. If the zone goes into a prolonged and deep recession, we are all in trouble.

JCK said...

AK

Looks like even zero growth for Euroland is a challenge.

Look at Spain today.

Methinks they are just going to feel the full brunt of the recession in the nest few qtrs.

BTW UK is also in recession.

Its going to be real rough in the next few qtrs.

AK71 said...

Hi JCK,

It does look like a challenge.

It is obvious that Mr. Market is worried and we could see more selling. For the bulls, 3,000 points on the STI is beginning to look less convincing as the barrier to break.

JCK said...

UK getting worse..3 qtrs negative growth now...

http://www.dailymail.co.uk/news/article-2178604/UK-economy-Osborne-rack-As-shock-figures-worst-double-dip-50-years-Chancellor-faces-Tory-calls-stripped-key-strategy-role.html

JCK said...

Euroland looks like its on its last drip.......very bad

"The euro has broken down and faces collapse with 'incalculable economic losses and human suffering', according to an extraordinary warning from a group of leading economists.

The 17 experts said Europe was 'sleepwalking towards disaster', adding that the situation in 'debtor countries has deteriorated dramatically'.

'The sense of a never-ending crisis, with one domino falling after another, must be reversed,' they said. 'The last domino, Spain, is days away from a liquidity crisis.'


The warning comes as eurozone states edged towards a financial disaster that could tear the single currency apart. Analysts said Spain's huge economy was at a 'tipping point' and would inevitably need international aid.

In a sign that Europe's debt crisis is deepening, Italy's borrowing costs edged higher yesterday and ratings agencies threatened to strip Germany of its gold-plated credit rating because of the risk of the crisis spreading.
The experts include two members of Germany's Council of Economic Experts and leading euro specialists at the London School of Economics, all of whom support the single currency.

'This dramatic situation is the result of a eurozone system which, as currently constructed, is thoroughly broken,' they added.

'The cause is a systemic failure. It is the responsibility of all European nations that were parties to its flawed design, construction and implementation to contribute to a solution.

'Absent this collective response, the euro will disintegrate,' they said in a joint report for the Institute for New Economic Thinking.


Read more: http://www.dailymail.co.uk/money/news/article-2178622/Euro-doomed-warn-experts-eurozone-sleepwalks-disaster.html#ixzz21gwCHc63"

AK71 said...

HI JCK,

It does sound really bad, doesn't it? Well, we can only wait and see how things would turn out in the next few months...

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